Harold's Photo Expects 50 Percent Growth in Holiday Specialty Products Using Xerox Digital Printing Systems

Business Wire, Dec 20, 2007

Eight-store chain is increasing calendar, photo book, notecard business; digitally printed greeting cards in high demand

ROCHESTER, N.Y. & SIOUX FALLS, S.D. -- Santa Claus will be good to Harold's Photo Centers, Inc. this year. A lively demand for holiday gifts created with personal photos is expected to drive a 50 percent increase in photo specialty products made on the company's two Xerox Corporation (NYSE: XRX) DocuColor([R]) 260 Digital Color Printer/Copiers.

On top of a robust market for holiday cards, this season's growth will come from non-greeting card products such as notecards. Although they have been available to customers for less than a year, notecards already generate more than 100 orders per week. Calendars and photo books, each of which has grown by approximately one-third over the course of the year, also contribute to Harold's strong business results.

Since 2004, the company's film processing business has fallen by approximately 20 percent annually. From 2005 to 2006, the firm's digital printing business doubled, and its portrait and merchandise businesses also experienced modest growth.

"The transition to digital happened faster than predicted. We jumped into digital printing with both feet when our film processing business began to drop," said Bob Hanson, president, Harold's Photo Centers, Inc. "We expect a very busy holiday season and see good growth potential for 2008, thanks to our innovations with digital technology and growing consumer awareness about what they can do with digital photos and digital printing services."

The company's first Xerox printer was a Xerox DocuColor 3535 Digital Copier/Printer, installed in 2002. It traded up to a DocuColor 250 in 2005 and in 2006, installed its DocuColor 260s with EFI([R]) Fiery([R]) Color Servers.

"The new Xerox technology produces better image quality and it's significantly faster and more reliable," said Hanson.

The company's digital printing growth mirrors what's occurring throughout the country. The North American market for specialty photo products, such as greeting cards, calendars and photo books, is projected to grow at a compound annual growth rate of 24.5 percent through 2010, according to market-research firm InfoTrends.

Harold's Photo Centers' customers use kiosks inside each of its eight stores - 80 kiosks in all - or the firm's Web site to submit digital files and order photo products from templates designed by Harold's staff.

All photo specialty products are produced in a new digital print production facility Harold's opened this past summer. "Now we're a short-run print shop as well as a retail photo center. Having the print shop in house saved us. Nearly all of our growth is in digital," said Hanson.

The in-house print center has improved the company's control over quality, scheduling and profitability. Calendars, once outsourced, are now produced more profitably in house. Harold's also produces greeting cards for approximately 150 other retail stores, accounting for slightly less than 20 percent of its greeting card business. In 2006, Harold's produced its highest greeting card volume to date - 500,000 - and it expects to match that volume this year.

Harold's prints primarily on Xerox paper stocks, including various silk and custom products such as vellum media, in weights ranging to 100-lb. cover stock.

"We're always looking at paper. By changing to different weights and types of media we can offer many variations on our products," said Hanson.

About Harold's Photo Centers

Harold's Photo Centers, Inc., is an eight-store retail chain in South Dakota and Iowa offering film and digital image processing, portrait studio services and photo merchandise sales. Founded as a photo studio in 1910, the company is in its fourth generation of family ownership and is headquartered in Sioux Falls, S.D.

Customer Contacts:

For more information about Xerox production systems and services, visit http://www.xerox.com/tr/products or call 800-ASK-XEROX.

For more information about Harold's Photo Centers, visit http://www.haroldsphoto.com.

NOTE: For more information on Xerox, visit http://www.xerox.com or http://www.xerox.com/news. For open commentary and industry perspectives, visit http://blogs.xerox.com/. XEROX([R]) is a trademark of XEROX CORPORATION. DocuColor([R]) is used under license.